WILL CARS GO THE SAME WAY AS CDS AND DVDS?

OVER the past decade or so, the technology industry has transformed many things we used to buy as physical products into digital services we now subscribe to or access on a pay-per-use basis.

Think about how we have moved from buying CDS towards paying a monthly subscription to use Spotify, or the shift from DVDS to Netflix.

Could cars be the next part of everyday life to be transformed from a physical product into an on-demand service? Some technologists and economists predict that the privately-owned car will go the way of the horse and buggy within in a decade. In their view, only motor enthusiasts and the rich will one day own personal cars, which they will use for leisure rather than transportation.

One study in the US, for example, forecasts that private car ownership will fall 80% by 2030 and that using electric ride-shares will be four to 10 times cheaper than buying a new car by 2021.

We’re already at the beginning of this revolution, with ride-hailing services, Uber and Taxify, already potentially cheaper than owning a car.

Mytreasury.co.za crunched the basic numbers and found using Uber could be more cost-effective on a per-kilometre basis for people in Joburg, Cape Town and Durban who travel less than 50km a day.

While the technology is advancing fast, it may take longer to change human behaviour. For many of us in the middle classes, a car is more than a way to get from point A to point B, it is also a status symbol, a fashion statement and an emblem of personal freedom. This is why car ownership remains stubbornly high in European and Asian cities, even with their cheap, reliable public transport.

The transition will even be slower in a country like South Africa.

Still, the rise of on-demand technology is already affecting many aspects of the car ownership experience. Data at Naked indicates that a surprisingly small percentage – just over 21% – of customers opt for car hire as part of their insurance cover. The reason for this could be that many Naked customers choose to save on their premiums knowing that they can Uber for a while if something happens to their car.

So, while car ownership and car insurance are likely to be a part of your life for some years to come, connected technology will change your experience in remarkable ways.

Alex Thomson is co-founder at Naked, an Ai-based car insurance business